Introduction

Alternative asset classes have been under the radar for many years but with improved ways of accessing asset classes such as infrastructure and gold, investors now have more options.

Central bank policy has driven up the correlation between equities and bonds, forcing advisers and their clients to look at more unusual assets for returns and income.

Ross Andrews, director of fixed rate bond provider Minerva Lending, points out: “With inflation likely to remain above target for some time due to sterling's weakness, the struggle for people to keep their savings real has no obvious end in sight.

"In this negative climate, more needs to be done to raise awareness of the savings risk, which is wreaking havoc with people's cash.

"Many people are still unaware that, in real terms, their savings are losing value.”

He suggests: "It’s no surprise more people are looking to alternative investments to keep their returns real. But when they do, they may wish to seek independent financial advice.”

While there is an appetite for alternative assets, clients may well be unaware of the best way to get exposure and the pitfalls to avoid.

This guide will look at the rise of infrastructure as a more mainstream asset class and how gold can fit into a client’s portfolio, alongside bonds and equities.

It will also explore whether the investment trust structure is the best way for investors to get exposure to alternative asset classes and why that is.

Finally, collectible investments have come under scrutiny after several scams in which investors lost money. But can investing in fine wine or vintage cars be a suitable and even profitable investment for some clients?

In this guide

Please answer the six multiple choice questions below in order to bank your CPD. Multiple attempts are available until all questions are correctly answered.

Mr Scott lists the attributes of infrastructure as an asset class, but which one of these does not apply?

Exposure to a predictable and relatively secure stream of cashflows over the long-term

It is uncorrelated to other asset classes

Generally backed by public sector counterparties or regulated market positions

A high degree of inflation linking

Mr Hammond says typically a long-term strategic allocation to gold will account for what percentage of an investor's portfolio?

1-5 per cent

5-10 per cent

10-15 per cent

16-21 per cent

Mr Scott says: "We access gold through exchange-traded products backed by physical gold holdings. In our view those are a robust way to access gold without the costs and difficulties of owning gold in physical form". True or false?

True

False

According to Mr Hambidge, alternatives have gained in popularity since when?

Since the inauguration of president Donald Trump, due to his promised infrastructure spending

Since the referendum last year, following the weaker pound

Since the start of 2016, when there were fears over a hard landing for China

Since the financial crisis, largely as a result of plummeting bond yields

Ms Best lists several things investment grade collectibles can provide in a portfolio, but which one is the odd one out?

Diversification

Physical store of wealth

Guaranteed income in retirement

Joy of ownership

According to Ms Best, what type of investor may benefit from a small allocation to collectibles?

Those who are near retirement

Those with a well diversified investment portfolio

Those who are just starting to invest some money

Those who only have exposure to equities in their portfolio

Nearly There…

You have successfully answered all the questions correctly, well done!

You should now know…

Understand whether infrastructure and gold have a place in an investor's portfolio.

Learn whether investment trusts are the best way to get exposure to alternative assets.

Comprehend whether collectible investments can be a useful portfolio diversifier or avoided altogether.

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